What Is The Money Measurement Concept? Which One Factor Can Make It Difficult To Compare The Monetary Values Of One Year With The Monetary Values Of Another Year?

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Solution

Money Measurement Concept mainly refers to those events that can be expressed in monetary terms and are recorded in the books of accounts. Thus, the money measurement concept enables consistency in maintaining accounting records.

For example, 15 laptops sets of Rs 50,000 each are purchased and this event is recorded in the accounts book with a total amount of Rs 7,50,000.

The factor which can make it difficult to compare the monetary values of one year with the monetary values of another year is inflation.

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